If the mere mention of blockchain technology—or cryptocur-rency, for that matter—triggers a mix of skepticism, disdain, and
confusion, you’re certainly not alone. Much of what is “explained”
to us about blockchain in media and academic papers is itself
perplexing, filled with jargon like “decentralized distributed ledger” and “cryptographic hash.” Like many technologies, its own
complexity has become, in some ways, exclusionary.

Yet blockchain has such universal, and inevitable, applications
that it simply cannot be ignored, particularly by the CRE industry. It will
soon serve as the very backbone of the
way in which we initiate, verify and
complete transactions in this
business. This
means that brokers, property owners and tenants
alike will need to start thinking about
blockchain as a vital new tool in their
daily workflow.

This doesn’t mean that everyone
suddenly needs to become an expert in cryptography. In fact,
most of the functions that the technology performs will be hidden from plain sight. This isn’t unusual. For instance, very few
people in commercial real estate who use everyday programs
like Salesforce have the technical background to know what’s
under the hood, but that doesn’t stop us from using it. Similarly,
successful real estate professionals will want, at minimum, to
understand the immense benefits that blockchain will provide
to their business in the years ahead.

Fundamentally, blockchain is a technology that will ensure
that data is transparent, verified, and unalterable. This ability
carries major implications for real estate professionals:

Drastically Reduced Timelines: Think about all the time that’s
currently spent on underwriting, due diligence, title work, and,
ultimately, signing a contract. Each of these processes is individually time-consuming because the data at hand must be manually
reviewed and confirmed. CRE professionals depend on information (property title, operating statements, etc.) that come from a
variety of sources. Blockchain technology will be used to aggregate and store critical property information that can easily prove
that other data—used underwriting and due diligence, for
example—is true. For a broker, this will cut traditional transaction timelines dramatically.

A Reliable MLS: One of the core challenges for brokers todayis finding property information that is both complete and up-to-date. Most databases are proprietary and somewhat unreliablebecause the data is cultivated manually and stored across differ-ent providers in different formats. A blockchain, on the otherhand, can function as a comprehensive ledger that is updated byconfirmed transactions, with the ability to house critical informa-tion including property records, capital values, ownership history,tenant details, age of the property, and title. A blockchain-enabled MLS provides a broker and the market with more trans-parency, since all transactional information will be updated pub-licly and in real time.Trusted Identities: Today, real estate professionals confirm theidentity of their counterparties with one reliable tool: their eyes.That’s because deals are inked in-person with pen and paper.However, what if there was a way toexecute a deal with the click of amouse, while still knowing with cer-tainty that your deal partner is whothey say they are? That’s what a block-chain will do, thanks to its ability tocreate a unique digital signature foreach participant, with the ability tosee transaction history to gauge repu-tation. This will break down geo-graphical barriers and remove fric-tion from the deal process.Real estate is, at its core, a people-centric, relationship-driven industry.However, as has become clear inrecent years, technology can enhancethe deal process. Technology canhelp to automate the science of atransaction, but still empower thebroker, principal and tenant in theart of deal making.As the industry inevitably inchestoward storing its data on a blockchain, it would be wrong tothink of it as an elite and complex technology. (In fact, you mightnot need to think much about the underlying technology behindit at all.) Instead, look forward to a day when a blockchain canmake the commercial real estate transaction process more straight-forward, efficient and secure for all industry professionals.

Gordon Smith is the CEO of Biproxi Inc., a recently launched global
online CRE marketplace for brokers, buyers, and tenants. The views
expressed in this column are the author’s own and not that of ALM’s
Real Estate Media Group.

It’s Time to Start Thinking About Blockchain in Real Estate
TECH TALK

By Gordon Smith

The partnership with Blackstone: “The Greystar Student
Housing Growth and Income Fund will be focused primarily
on housing that’s both on campus and close to campus. The
deal with Blackstone was an opportunity to take some other
really great assets at some great universities and capitalize
them differently. They were all off-campus properties and just
a little different than the cash-profile of our on-campus and
close-to-campus assets.”

Student housing’s role as a defensive stock: “It’s certainly something that made this acquisition even more exciting. These are
low-leverage strategies so it introduces a safety factor. And the
fact that the student housing sector is not as volatile as other
commercial real estate asset classes, and performs pretty well in
a potential downturn, is definitely something that’s compelling
to not only our company, but also to other capital providers
around the globe.”—Erika Morphy ◆

What if there
were a way to
execute a deal
with the click of
a mouse, while
still knowing
with certainty
that your deal
partner is
who they say
they are?